In terms of your credit rating, the answer is a definite ‘No’ as both Debt Relief Orders (DROs) and Bankruptcies are listed on the Insolvency Register and that means a zero credit rating for a minimum of 15 months. That point aside, the effect is very similar to bankruptcy in that your debt is wiped out once and for all. It is not restructured or shuffled about as is the case with Debt Management Programmes (DMPs), it is gone forever.
However, very few people actually qualify for DROs as the criteria are so strict. Not only do your debts need to total less than £20,000 but you need to be on a very low income (or on benefits), have virtually no disposable income at all and have no assets worth mentioning. If you Google the exact criteria and feel you might qualify, it can be arranged through your local CAB.
Regarding Debt Management Programmes, these are temporary solutions that effectively keep creditors at bay, but do not solve the problem of getting rid of the debt. In fact, the only people who benefit from DMPs are the companies who arrange these facilities, as they get a cut of every payment made. Will they step up to the plate when Bailiffs appear or threatening letters arrive in the post? No they won’t.
A company arranging a DMP will do a quick assessment of your circumstances then write a bog standard letter to your creditors, and that’s it. If there are any complications you are on your own.
‘Is a Debt Relief Order better than Bankruptcy’ is just one of hundreds of questions we’ve answered over the years, but feel free to call us on 01425 600129 if you need to know more or specifically need bankruptcy help. Our staff are ex-financial services and have the experience to get you the best result every time.